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Financials Flash Warning Seen Before 2008 Mainland Slump

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Chinese stock bulls may want to take note of the selloff in financial shares.

If recent history is a guide, the losses in the CSI 300 Financials Index -- which total 8.1 percent since the start of the year -- are signaling that the world-beating rally in Chinese equities could be about to come to an abrupt, and painful, end. The last two times the industry lagged this much behind the broader benchmark gauge, which is up 1.7 percent this year through Thursday, were in November 2007 and August 2009. The CSI 300 Index then proceeded to lose an average 42 percent over the following 12 months.